Category: Research

How many brands or products are you loyal to? Would you believe it’s in the hundreds? While you may only name a handful of brands that you feel loyal to, your buying behavior is at least as important as your feelings.

This article outlines how to analyze the competitive loyalty landscape before launching a new consumer product. The results indicate a strategy to win trial adoption and consumer loyalty.

Attitudinal Loyalty

If you like Starbucks, Ikea, and BMW, you have some degree of attitudinal loyalty towards those brands. You prefer them over alternatives for reasons other than cost or convenience. Brands work hard to build attitudinal loyalty for obvious reasons: it’s a powerful way to build repeat business, and a competitive advantage.

Behavioral Loyalty

So why do you actually visit Dunkin’ Donuts, shop at Walmart, and drive a Toyota? Behavioral loyalty describes what people actually buy, which often involves cost and convenience considerations. While you may enjoy shopping at Ikea, they sadly don’t sell bread and milk, yet.

You can dislike a brand and still exhibit behavioral loyalty: you may not love your telecom provider, but you still pay the bills. You can also have attitudinal loyalty without buying anything: you like Tesla, but won’t buy one until the price drops to meet your budget.

How Loyalty Matters to New Brands and Products

Introducing a new product into a competitive category requires breaking, and then winning the loyalty of customers. To create a loyalty-winning plan, it’s important to understand what kind of loyalty customers have, why they have it, and exactly what it would take to break it and win it.

How to Assess Loyalty in Your Target Market

The best way to assess loyalty is by asking consumers using surveys. That’s because buying behavior can be seen in standard market research reports, but the reasons driving that behavior and how consumers might react to a new product can only be estimated by asking them. The techniques below were developed by HIT Laboratories to assess competition and loyalty for new health, beauty, and cosmetics products.

Step 1: Similar Product Usage

Loyalty is only an issue if your target market thinks your product competes with what they currently use. In the below example, 43 percent of respondents don’t use a product similar to the one tested. That reduces the marketer’s challenge for that large segment to conveying the product’s value, rather than breaking existing loyalty.

Step 2: Product Comparison

For the remaining 57 percent who already use a similar product, how does the new product compare? If it doesn’t appear to be at least slightly better, it has a slim chance at replacing it. In this example, a combined 57 percent thought the new product was better overall than what they already use.

Step 3: Know your Competition

What exactly is the target market currently buying? Below is an excerpt from hundreds of actual responses. Sometimes respondents will cite a product that doesn’t appear to be competition. But what we think is irrelevant; it’s competition if your market thinks it is.

Step 4: Competition-Loyalty

Now that the competition is known, how loyal is your target market to those competing products? Behavioral and Attitudinal loyalty can be separately assessed by asking respondents questions about their feelings and purchasing history.

Step 5: Loyalty Quadrant

Possible marketing strategies become apparent by plotting the attitudinal vs. behavioral loyalty. While this is a complex topic, we can generally say that if there is low behavioral loyalty, consumers are frequently trying alternatives, possibly swayed by new product offerings, discounts and coupons, or variety-seeking behavior. This suggests it may be easy to acquire trial purchases, and focus should be put on programs or features that drive loyalty to retain customers.

If there is low attitudinal loyalty for competing products, there may be an opportunity to create a brand with more personality or other likable attributes. This strategy has been clearly visible among North American telecom providers over the past decade, as they’ve attempted to infuse their brands with distinct personalities.

Other Product Marketing Considerations

After assessing the nature of loyalty among the target market, examine the specific ways a new product could gain and hold customers. This is beyond the scope of this article, so these considerations will only be summarized below.

Competition-Loyalty Reasons

Respondents who use a similar product are asked why they buy it rather than any other product. These reasons can help in designing a strategy to gain market share.

Switching Potential

Respondents are assessed for how likely they are to switch to a new competing product for a trial duration. Even very loyal customers may be open to a free product trial, depending on the product type.

Switching Incentives

Respondents indicate what specific incentives would cause them to buy the new product over their current one on a long-term basis. This can indicate the best basis of competition.

The above Loyalty Analysis is a standard component of the Cosmetics Assessment Standard (CAS) study, which assesses the appeal of new health and beauty products and provides actionable product improvement and marketing insights.

Getting early market feedback is crucial for consumer product development. While this is widely known, the different available methods can be confusing for inventors and marketers.

Few things compare with concept surveys for speed, validity (statistical power), and depth of results. The main purpose of this early-stage survey is to benchmark the appeal of a new product idea against similar alternatives that are already in the market. If the product scores higher than the alternatives, it’s a good sign of potential product viability. If not, the results will show where the concept is weak, and may suggest improvement ideas.

An excerpt from a new product concept survey report. The tested product’s viability metrics are compared against those of benchmark products. The study type shown is for testing the viability of new beauty products.

Various study configurations are common, but they all typically employ 200 or more respondents, are conducted through online questionnaires (which significantly improves speed and cost).

Respondent recruiting is an important issue, and targeting criteria will depend on the purpose and stage of the survey. A “mass-market” sample (which is representative of the general adult population) can help identify the product’s target market by reporting which segments have the greatest interest in buying the product.

Example demographic response to a new invention idea, used to help identify the target market.

If the target market is already determined, the survey sample can be recruited from that specific population (for example, “US women age 18 to 24”, or “dog owners age 50+ in Florida”). From that population, different product variations (“concepts”) can tested to determine which has the best sales metrics.

The purchase intent for a new product is displayed by region, indicating where the best region to launch the product may be.

Some early-stage developers choose to conduct their own informal surveys, which can help determine consumer preference or critical product flaws. Professional research can be a worthwhile investment because do-it-yourself surveys may not pass the Investor Test. If you conduct your own surveys, be sure to address these important issues:

Questionnaire design: it’s easy to write questions that are confusing, leading (causing bias), or can be interpreted in several ways. The manner and order in which you ask questions can also significantly affect the responses.

Benchmarking: if you learn 50% of respondents “like” your product, is that good or bad? Without a database of other results, or running benchmarking surveys, the results are inconclusive.

Inventors face many challenges, and perhaps the most serious is the issue of marketability. After all their invested time and effort, will they be able to raise funding for manufacturing? Will they be able to get retail distribution? Will anyone actually buy it?

This issue is known as concept validation, and there are two key components for product development:

Technical Validation: Proving the invention is technically possible (that it will work properly)

Market Validation: Proving that people will buy the product (in sufficient quantity, at the required price)

A characteristic of inventors is that they tend to like inventing, leading them to focus on technical validation. At some points, perhaps after perfecting their prototype, or receiving their first sample batch, they must address the second and larger challenge: proving people will buy it.

An easy way to know if you’re validating your product idea sufficiently is with the “Investor Test”. Ask yourself:

If I showed the results to an investor, would it give them the confidence to invest in my product?

This is a very relevant question because many inventors eventually find themselves asking that exact question. A good invention validation method will be:

Quantifiable: instead of vague observations, results should be measurable (numeric).

Reproducible: you could run the test again, and get similar results.

Trustworthy: conducted by competent people, in an unbiased manner.

While asking family and friends what they think of your new invention is a good idea, it clearly fails the “Inventor Test” of concept validation:

It’s not quantifiable because the results are typically qualitative responses like “that’s a good idea, can I get it in blue?” Even if you attempt to measure their responses, the results won’t be statistically significant unless you survey many hundreds of friends.

It’s not reproducible because you can only observe the initial reaction of your friends and family once.

It’s not trustworthy, because your friends and family have inherent biases not present in typical consumers.

It’s naturally a good idea to validate your invention idea in multiple ways. This will give investors more confidence to fund your product, and give you more assurance that you’re on the right track.

A study was conducted in May 2016 by HIT Laboratories, revealing consumers may be up to 266% more likely to purchase a beauty product if subjective claims are added to its description.

A subjective claim is one that consumers can judge for themselves, such as if they think the product made their skin softer. This is contrasted with an objective claim, which usually requires scientific measurements of results (such as actual measurements of their skin’s softness using a device).

Beauty Claims Study Results

In the study, survey respondents were shown an “anti-wrinkle complex” cream and short description. Some respondents saw the description alone, while other respondents also saw subjective claim study results.

When asked about their likelihood to purchase the product, the group that saw the claims was 60% more interested in purchasing the product, and 266% more likely to pay the $29.95 product price.

FTC Regulations and Claims

Beauty product claim regulations are generally set by the Federal Trade Commission, which advises that all claims must have competent and reliable scientific evidence to support them.

The required extent of testing depends on the strength of the claims and the impact they would have on consumers, among other factors. Furthermore, claims that suggest the product can prevent, diagnose, treat, mitigate, or cure any disease would effectively classify the product as a drug instead of a cosmetic according to FDA policy.

How to Substantiate Claims

Several U.S. companies including HIT Laboratories provide claim substantiation services. For subjective claims like the ones tested in the survey, the tested product is typically provided to between 20 and 50 subjects who use it for a specified period. Their results are measured or recorded, analyzed, and compiled into a final report. The claims that can be made in advertising are based on the final results.

This article is intended for informational purposes only and not for the purpose of providing legal advice.